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activities of J&G Enterprise are reported on a separate
Schedule C. Two checks in the amount of $2,500 each were written
to Big Brothers/Big Sisters. The checks bore notations that they
were for “donations”. Big Brothers/Big Sisters is a charitable
organization. Big Brothers/Big Sisters assisted J&G Enterprise
in finding a place for people to use the fireworks products,
provided the labor to help with parking and traffic, and provided
labor to meet the customers who came into the retail store.
Petitioners deducted the $5,000 that was paid to Big Brothers/Big
Sisters as promotions expense on their Schedule C for J&G
Enterprise in 1993.
Among the adjustments determined in the notice of
deficiency, respondent disallowed deductions for bad debts of
$370,000 and $246,175 for 1993 and 1994, respectively, on the
Schedule C for the “loans and collections” business. Respondent
determined that the net income or loss from the Schedule C
businesses was solely attributable to Mr. Dunnegan for self-
employment tax. Respondent disallowed $5,000 of the promotions
expense that related to J&G Enterprise in 1993.
OPINION
Petitioners expressly conceded some of the adjustments that
were determined by respondent in the notice of deficiency. Those
adjustments support the penalties imposed under section 6662(a).
All of the other adjustments that were not addressed by
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